Reference no: EM132672519

Problem 1: If you have $100K, and want to invest in assets A, B and C. Asset A has historical AVG return of 15%, asset B 20%, and asset C 10%, in what proportions of $100K would you allocate into assets A, B and C? i.e. Which scenario seems most rational?

Option 1: A > B > C

Option 2: A > C > B

Option 3: B > A > C

Option 4: C >A > B

Problem 2: In the above $110K allocation problem, you decided to allocate 30% weight in A, 50% weight in B, 20% weight in C, and you want to find its AVG return. Which of the following is the appropriate method to find the mean (AVG) return on the $100K fund invested?

Option 1: Weighted Average (WAVG )

Option 2: Simple Average

Option 3: Geometric Average

Option 4: Arithmetic Average